Customer

Dissatisfaction as
A Source of
Entrepreneurial
Opportunity
K.Ramachandran
Indian School of Business
 K.Ramachandran

K Ramachandran joined the Indian Institute of Management, Ahmedabad, in 1986

soon after obtaining a Ph.D. from the Cranfield School of Management, UK. He was an
academic advisor to the Satyam Computer Group on e-business during 2000-2001. Since
July 2001, he is a Professor of Entrepreneurship and Strategy and Head of the Wadhwani
Centre for Entrepreneurial Development at the Indian School of Business, Hyderabad.
He has been teaching on short and long duration programmes, including MBA and
PhD since joining IIMA. He ahs done research on entrepenreurship and strategy and has
published extensively in reputed Indian and overseas journals including the Journal of
Business Venturing, Small Enterprises Development Journal, Entrepreneurship & Regional
Development, Venture Capital, Keio Business Review and Vikalpa. He has presented
papers on entrepenreurship and strategic management at national and international
conferences. He has also published three books and has contributed chapters to books
on entrepenreurship, global strategy and research methodology.
His strong areas of knowledge include all aspects of entrepenreurship and strategic
management with special focus on growth strategies, customer satisfaction, resources
management, innovation, corporate venturing

K.Ramachandran 22 Nanyang Business Review

Vol. 2 No. 2 July – December 2003
 Customer Dissatisfaction as a Source of
Entrepreneurial Opportunity

Abstract

Millions of dollars are wasted every year in failed and less successful new
products and ventures. This is universally true. Not much success has been
made so far in solving this problem, though identifying an attractive investment
opportunity has been one of the determining factors of firm success.
Methodologies to spot an opportunity have been scarce and weak. This paper
discusses a simple but highly effective framework to fill this gap. This is based
on the logic that customers buy new products and services if they are dissatisfied
with the existing and if the new offering is better. Here customer need may be
explicit or latent. Two implementable frameworks are discussed. One, Criticality-
Discontentment Matrix for opportunity identification and, two, Customer
Dissatisfaction Elimination Chain to refine business strategies and thus to achieve
zero customer dissatisfaction for any business. A number of case studies from
globally known firms have been referred to illustrate the frameworks.

How to Identify Entrepreneurial Opportunities

Fact
• most ventures fail for want of customer support, with higher mortality at start up
• most entrepreneurs ‘click’ once or twice, not always
• most venture capitalists do not hit the base every time they swing the bat.

M
ost often entrepreneurs rely on
their intuition; they do not use
any clear reliable framework to
check the power of an idea. They do try
to check the attractiveness of the idea in
terms of the overall demand and
entrepreneurial capabilities to exploit it
commercially. After tracking the history
of ninety new ventures from the US,
Europe, Japan and Asia, representing a
number of industries at different stages
of growth and operating under different
economic conditions, we seem to have
created a simple, basic framework that can
predict the possibilities of success of a
new product in the market. This has been
refined and validated further and
discussed here. Building on this matrix,
we have developed another framework
that enables firms to refine their product
market strategy and constantly meet
changing customer needs.
Customer Dissatisfaction:
the source of opportunity
Fundamentally, firms do not sell
products or services. They offer solutions
to customers’ problems. Customers pay
for them based on their perceived
confidence in the ability of the product or
service to solve their problems. In that
sense, customers always look for a
better alternative to eliminate their

K.Ramachandran 23 Nanyang Business Review

Vol. 2 No. 2 July – December 2003
dissatisfaction; if one product is found
better than another, they buy that.
The search for an alternative arises
either when customers are dissatisfied with
the existing products (including services)
or when customer needs change under the
influence of a number of stimuli such as
age, income, habits, interests and
knowledge about things available
elsewhere. In that sense, customer needs
are dynamic and firms have to understand
the changes in needs constantly to
eliminate customer dissatisfaction entirely.
Conventional wisdom suggests that
dissatisfaction is uni dimensional.
However, a closer, analysis would show that
this is not true. The extent of
dissatisfaction is not the same for all
products and services even if they are
equally poor on all features. Similarly, the
extent of dissatisfaction is not the same
for the same product under different
conditions and at different points in time.
For instance, the extent of dissatisfaction
with the quality of a TV channel is not the
same when we watch an important
programme and at other times. Similar are
the feelings with Internet connectivity or
the quality of drinking water supply,
depending on their importance to us.
We did a content analysis of customer
comments on their level of dissatisfaction
with a number of different products which
showed that dissatisfaction has two
dimensions. One, the extent to which
customers are discontended with the
features of a product and processes
involved in its purchase and consumption.
Two, the level of criticality of specific
features and processes to customers.
These are independent dimensions of
customer dissatisfaction.
However, such bifurcation of
dissatisfaction has not caught the attention
of researchers on customer satisfaction so
far, though there have been a number of
excellent papers in this area, (Singh and
Wilkes 1996; Bearden and Teel 1983;
Olshavsky and Miller 1972).
Parasuraman, Berry and Zeithaml (1985)
had identified customer need as one of the
three factors determining customer
expectations and resultant satisfaction in
service organizations. They confirmed the
K.Ramachandran
importance of customer desires as a
determinant of satisfaction. Homes (2000)
has also discussed the relationship between
customer expectations and dissatisfaction.
It is useful to remember that the purchase
decision of a customer is influenced by a
number of factors (Teare 1994; 1998).
They include: consumer’s preference
structure, information search behaviour,
prior product experience, extent of product
involvement, feeling of perceived risk,
extent of role specialization and the role
of decision rules in choice. Mittal and
Kamakura (2001) concluded that customers
with different characteristics have
systematically different thresholds and
response biases. This helps to explain why
a customer’s level of satisfaction with the
same product changes over time.
In all these references, there has been
no serious effort made to study what
constitutes customer dissatisfaction. It is
common knowledge supported by research
evidence that the level of dissatisfaction
rises when importance of the need goes
up. For instance, Goodman and Fichman
(1995) studied the relationship between
customers’ evaluation of core and
peripheral factors in their transactions and
customers’ overall satisfaction. They
concluded that customer dissatisfaction
with peripheral factors (such as help on
product use) may make them more
dissatisfied with the overall performance
of the product. They too have not
categorized the peripheral factors as more
and less critical needs, though they seem
to admit that not all factors, core or
peripheral impact the customer equally. In
essence, when needs are expressed as
desires, which are either not met in part or
in full, entrepreneurial opportunity arises.
Interestingly, the relevant entrepreneurship
literature focuses heavily on the strengths of
the entrepreneur and not so much on
customer need. This includes exploration
of opportunities based on technological
innovations (Colarelli and Rice 2001; Choi
and Shephard 2000) and the entrepreneurs’
previous work experience and area of
expertise (Hench and Sandberg 2000; Kickul
and Gundry 2000; Melyrath and MacMillan
2000; Hills and Shrader 1998; Kirzner 1997).
Christenson and Peterson (1990) concluded
24 Nanyang Business Review
Vol. 2 No. 2 July – December 2003
 that specific problems and social encounters
experienced / observed by entrepreneurs are
sources of venture ideas. This probably is
one of the few studies capturing the essence
of opportunity in customer problems. A few
studies (Henard and Szymanski 2001;
Kleinschmidt 1987; Cooper 1979) on
industrial products have concluded that
the key to success in industrial products
remained unknown. However, introduction
of unique and superior products, unique
customers benefits and solving customers’
problems were identified as factors
contributing to new product success. From
an entrepreneurial angle, this means
reduction or elimination of existing customer
problems and dissatisfaction revolving
around them. However, this stream of
enquiry has not captured much attention in
recent years.
It is in this context that this paper
becomes relevant. Since discontentment
and criticality are two independent
variables, we need to examine their
influence on the level of customer
dissatisfaction and resultant
entrepreneurial opportunities.
As shown in Exhibit 1, this
Discontentment – Criticality Matrix is the
heart of entrepreneurship opportunity
identification process. Customers are most
dissatisfied when they are most
discontended with the features and
processes of buying and consumption for
a product which is very critical to them
(Quadrant 1). Customers are least
dissatisfied if the discontentment
level is very insignificant or nil for a
product which is not at all critical to the
customer (Quadrant 3).
Exhibit 1: Criticality-Discontentment Matrix
K.Ramachandran
Quadrant (1) offers the most attractive
market opportunity to anyone who offers
solutions to customers who are most
dissatisfied. Since customers in this
quadrant eagerly look for new products,
firms will have to make minimum
marketing efforts as there will be a natural
pull coming from customers. The reason
for the rapid success of a number of
products including Barbie doll, Dominio’s
Pizza, Dell Computers and the Harry Potter
series of books can be attributed to the high
level of customer dissatisfaction that
existed at the time of their entry, with the
available alternatives. These experiences
are elaborated below.
1. Barbie
Barbie doll’s wonderful success story
reinforces the criticality – discontentment
argument of opportunity made here. Barbie
doll made Mattel Toy’s sales to go up to
$96m in 1964, compared to the pre-Barbie
sale of $9m in 1959.
Ruth Handler got into toy business in
the early 1940s, and introduced the Uke-
A-Doodle musical instrument in 1947, and
a toy piano with black and white keys and
real scales a few years later. During the
1950s, Mattel became the third-largest toy
company in the world.
Handler noticed a basic play need in a
child when her 9-year-old Barbara imagined
adult features for her paper creations;
stewardesses, secretaries, or college coeds.
She noticed in her daughter the existence
of a critical need to have dolls that enabled
her to fantasize an adult life (beyond being
a mother). She also noticed that the
existing products did not have the features
to eliminate the discontentment that
existed. She built on some adult dolls
collected from a Swiss holiday, and
redesigned to make them look like the
current day Barbie. She hired a hairdresser
to experiment with hairstyles,
and a dress designer to design a complete
wardrobe of clothes.
The trader perception that children
always wanted to be mommies and hence
little girls wanted cuddly bobby dolls got
shattered when Barbie galloped the store
shelves. It took Mattel three years to
eventually catch up with the burgeoning
25 Nanyang Business Review
Vol. 2 No. 2 July – December 2003
customer demand. Barbie met two kinds
of customer needs. One, an already high
critical need to fantasize an adult life, and
two, a need to be like others. Since there
were no real alternatives for these dolls,
the existing level of dissatisfaction was
very high [quadrant (1)].
2. Domino’s
The success of Domino’s Pizza from a
borrowed $500 and one shop to a $3.4
billion international company with 120,000
employees in 2,000 outlets across the
world demonstrates the discontentment-
criticality link very clearly.
Domino’s Pizza’s phenomenal success
can be attributed to its initial ability to spot
a segment of the market, which was highly
dissatisfied with the then existing
possibilities for cheap but high quality
food. In 1960, when Tom Monaghan and
his brother bought Domino’s Pizza in
Vpsilanti, Michigan, his largest customer
segment consisted of students of the
University of Michigan and the Eastern
Michigan University. Pizza was a highly
critical product for the students of
Michigan because of its high quality,
delicious taste and low price combination.
At the same time, they were dissatisfied
not with the product features but with the
processes involved in their purchase.
Monaghan realized that students were
reluctant to go out for pizza, particularly
during their examinations, though it was
one of the best and cheapest sources of
food for them. Besides, students, most
without cars, could stay in the dorms and
order pies to share with their friends.
Pizzas also provided them with some
respite from the drab and predictable
college food. This observation about
exam days also implied that students
would not go out whenever they are
busy, which is most often the case. Yet
another implication was that the total
potential market was much larger than the
numbers who came to the shop to eat. The
moment Domino’s removed all the hurdles
to their having pizza in their rooms, the
demand zoomed.

Box 1:

Good /Bad Opportunity Illustrations

Disney

When Disneyland was started, and customers were highly dissatisfied with the existing
alternatives Walt Disney met a critical need for amusement. In Disney’s own words, “existing
amusement parks are neither clean nor amusing, and offered nothing for Daddy”. Disneyland
became a roaring success because it shifted the speed and size of the thrill to the show
element. Their attractions were seen by visitors as extensions of the already famous Disney
movie experience with visitors taken out of their seats and placed in the middle of the
action. Disneyland has always been an attraction for the entire family, and has been kept
clean always.

VISA/Master Cards

The concept of a credit card, with guaranteed payment by a banking organization began
in the 1940s. The phenomenal success of Master and Visa Cards in the subsequent decades
can be attributed to their meeting a critical need for which the existing alternatives were
not at all satisfactory.
In the absence of cards, people had the option of carrying money (often in large quantities
to meet specific requirements) with the associated risks and discomforts. Those without
adequate cash had to either abandon shopping plans or postpone them. Cards eliminated
most of the high levels of discontentment associated with possession of liquid cash as the
means to buy. Since the need to have cash or its equivalent is critical for all, credit cards
met a critical need. In some cases, it enabled maturing of latent need for a number of
products, as it facilitated easy payments in multiple instalments at a later date.
Later card companies introduced variations including debit cards, ATM cards and co-
branded cards to eliminate customer discontentment in some other areas of financial
transactions.

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Vol. 2 No. 2 July – December 2003
 Gilbert Toys
Gilbert Toys, which was known for educational toys with solid craftsmanship made a
foray into mass market plastic toys in the 1960s. Though the need for new toys such as the
slot-car racing sets had become quite critical for every child to have, there were several
players in the market offering good quality product; so, customers did not have much
dissatisfaction of any kind. Gilbert’s entry would have had some impact, had it eliminated
some pent up dissatisfaction. It did not offer anything new. On the contrary, its poor
engineering, shoddy construction did not impress buyers, and word regarding its poor
quality rapidly got around.

Electric Cycle
Sir Clive Sinclair, pioneer of pocket calculator and pocket TV, took advantage of a 1983
law in the UK that permitted small electric vehicles on the highway without road tax, a
license or compulsory insurance. Sinclair imagined that availability of an electrically assisted
cycle would create new dissatisfaction with the existing geared cycle. In 1985 he introduced
C5, an open-top, single seater, lightweight three-wheel buggy, powered by a lead acid battery
and foot pedals. Unfortunately for him, instead of eliminating any dissatisfaction on the
CDE chain, it created more when many customers found the vehicle too low, too slow and
too limited in range. Customers were extremely disappointed with the poor technology
and lack of sophistication. Stores selected for selling vehicles often did not have enough
space to give demonstration rides to buyers, besides being familiar with its workings.
Also, it was priced much higher. It was seen more as a fun machine rather than a serious,
everyday, all-weather transport.

Ford Edsel
Edsel, introduced in 1957 in the US market, was designed as a “smart” everyday transport
solution for young executives and families on the way up. Ford was able to create great
expectations in the minds of the target group, and dissatisfaction about the existing
competing cars through a massive ad campaign. Unfortunately, the result was disastrous.
Ford failed to meet the hype surrounding its launch that led people to believe that it was a
major motoring innovation. Customers did not like its styling and the fancy failed to work
satisfactorily. Also, most of the cars in the initial lot had something wrong with nearly each
one of them, with overpowering as a basic problem.

The market for pizza could thus be
divided into customers for whom
belonging to different combinations of
levels of criticality and discontentment
existed as shown in Exhibit 1. The most
attractive segment has very high
criticality of need and high level of
discontentment with the existing options
for eating pizza type of food. Those who
went to the shop to eat reflected only a
tip of the potential market size. When
Domino’s offered home delivery of pizza,
it was able to mop up all the customers
who were at the high criticality-high
discontentment point in the matrix. Their
offering of high quality, fresh, tasty pizza
at reasonable price eliminated
all kinds of pent up discontentment
customers had about food.
Domino’s continued to offer traditional
pizzas with different toppings for almost
30 years. They covered more
geographical ground but with the same
target group of high criticality-high
discontentment customers who
wanted fresh, tasty and cheap food
[quadrant (1)].
Domino’s had two options to grow.
One was to focus on the less
dissatisfied and less critical market
segments in Michigan itself by
expanding capacity of their first store
further. Since the level of criticality
would be lower for the other customers,
Domino’s would have had to contend
with lower level of market pull. This is
a situation when both criticality and
discontentment are low. An alternative
would have been lowering prices. This
would have resulted in lower level of
profits particularly when the level of
discontentment also is lower.

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Vol. 2 No. 2 July – December 2003
 The other option was to target the same
segment elsewhere. They went for the
second option. Focusing on the section of
the society whether students or not, which
wanted tasty, hygienic and low priced
pizzas delivered at home they set up stores
in different parts of the US. Everywhere,
Domino’s became the home-delivery pizza
people. Domino’s continued with the time
tested traditional pizzas for almost three
decades before introducing product
innovations in the nineties.
It is when firms continue to offer
products, which are highly critical to the
customers, but also the absence of which
will create high level of discontentment that
they tend to become immortal. This is
amply illustrated by the experiences of a
large number of successful and failed
products across the globe.
Michael Dell met the so far unmet needs
of a category of computer customers who
wanted a say in the configuration of their
systems, which was critical for them. He
also eliminated a lot of discontentment that
existed in terms of price and delivery. Dell
is now one of the largest PC manufacturers
in the world.
The Harry Potter series of four books
made J.K. Rowling a household name all
over the world with her books getting
translated and distributed in most parts of
the world. These books met a highly critical
need of the children to fantasise with
excitement in a world full of magic, with a
lot of positive suspense built in. Yet
another of children’s critical needs is to be
like other children. There has been no
writer since Enyd Bliton who has captured
the imagination of children so well.
Quadrant (2) represents customers who
are highly discontended with the existing
products which are not critical to them
in terms of importance: for instance, poor
public transport in a town where
everyone travels by own vehicle.
Customers there are indeed discontended
with the quality of local public transport
service, but do not bother so much because
it is not critical to their movement. On the
other hand, poor quality of service of local
trains would become a major public issue
in any large city because of the criticality
of the service to the public. Poor quality
of peripheral features of many products
also belong to this quadrant. E.g.

Box 2:

Structure of needs and dissatisfaction

Dynamism in needs
This is a function of a number of variables such as income, habits, trends in the society,
and personal likes and dislikes. For people at lower levels of income the more important
needs are the basic needs as identified by Maslow and would include food, clothing and
shelter of a basic nature. For higher income people the ingredients and the quality of much
basic needs would vary. There are also possibilities of higher needs of a societal nature.
For instance, products used for daily subsistence a will be most critical for all people but
non-essentials will be less critical. Because of the dynamism in need, today’s non-critical
products may become very critical tomorrow. High prices as perceived by customers, can
also be a source of dissatisfaction. Some of these sources of dissatisfaction do influence
each other. For instance, new knowledge about better products can lead to dissatisfaction
with existing product features.
The criticality of a need is also influenced by habits such as for food and clothing.
Disregarding levels of income and social contexts of living, most people prefer to have
their traditional food. This is true with Indians, Chinese and the Spanish in Europe or the
U.S. The extent of criticality can also be influenced by fashion trends in the society for
items such as for clothing or furnishing. This is particularly so for youngsters. Individual
likes also determine the extent of criticality. This could be for music or even food. The
need for fun may be momentary, as is the case with some kind of food. In short, a close
analysis of the factors influencing the dynamism in customer needs would enable managers
to know where on the criticality continuum their products lie.

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Vol. 2 No. 2 July – December 2003
 Elements of Discontentment
When products fail to meet customer expectations, they feel discontented. The four
key sources of discontentment are: product features, process involved in buying and
consumption, and intangible external variables. Most often deficiencies in product features
are major sources of discontentment. This could be design related or manufacturing
related. In a world where most products are getting standardized at least in terms of their
core features, the challenge to understand the customer needs for peripheral features is
enormous. The key processes involved in buying start with collection of information
about the product. This could include level of discontentment with reference to adequacy
of data. During the process of buying, customers may get discontented for a number of
reasons such as lack of interest shown by sales people, ambience of the location (shop/
restaurant) particularly in the case of service business, and the extent to which
confidence in the product is built during product demonstration. With respect to
delivery, there can be discontentment due to delays, damage in transit and arrogance
of deliverers or service people. This can be particularly so for services such as courier
and products such as furniture or decorative items.
Consumers may get discontented for want of adequate training and instruction on the
use of the product as can happen in the case of a washing machine or a product to be self
assembled. Internet connectivity for want of band width and physical breakdown of
gadgets can also be sources of discontentment. Yet another source of discontentment
could be limited number of choices for customers, often for want of competition. In that
sense, availability of choices can eliminate discontentment. Toys are a category where
children always love to have new toys rather than using the same toy again and again,
disregarding their price.
One of the intangible sources of discontentment is customers’ knowledge about better
products offered elsewhere but denied to them. Discontentment may also be due to
knowledge about improved processes existing elsewhere for buying and consumption.
Thanks to the Internet and other communication facilities, knowledge dissemination is
faster now, creating opportunities for some and threat to some others.

customers do not bother much about the
poor quality of wrapper of a mineral water
bottle if the quality of water inside the
bottle is very high. However, level of
criticality of such needs may also undergo
changes over a period of time, and quality
of wrapper may also become a determinant
factor of brand preference.
Introduction of products into this market
will not be easy and new venturists have
to carefully identify niches for which such
items may be critical (and hence falling into
quadrant (1)) and the commercial viability
of such a decision. For customers who
belong to quadrant (2), substantial
marketing efforts will be required to make
impact, if any. This could include efforts
to change customer needs.
Quadrant (3) represents customers who
have currently no discontentment with
products which are any way not critical to
them. This is the least attractive part of
the market as considerable marketing
efforts are required to create demand, if any.
It may, however, be possible to move the
customer into quadrant (1) through the
discontentment-criticality tunnel as shown
in Exhibit 1.
Discontentment– Criticality
Tunnel
In dynamic external and internal
environments, customer needs keep
changing, some faster and more
substantially than others. In that sense,
the level of criticality for a product also
changes over a period of time. (There is
likely to be new customers entering any
given market segment at any given point
in time). As the criticality rises, latent need
also matures, and market pull goes up
(please see Box 2 for how latent need
matures). For innovative products, growing
level of criticality also means growing
discontentment with the existing since the
existing alternatives fail to meet the new
needs. Over a period of time, customers
with such critical needs and
discontentment will travel through the

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Vol. 2 No. 2 July – December 2003
Discontentment-Criticality Tunnel to reach
the farthest point in quadrant (1) as was
experienced by Kellogg’s in many countries;
for instance, it took about 25 years for
Kellogg’s to break-even their operation in
Japan and Mexico. Kellogg’s has been
following this strategy of deep investment
and long wait for customer needs to slowly
change through promotions, and making
their products critical in almost all
developing countries. Here Kellogg’s is
trying to change the levels of
discontentment and criticality of not any
breakfast item but specifically of cereals.
The speed of change and influence of such
attempts on specific factors determining
criticality obviously vary from society to
society. In essence, they are trying to shift
people from quadrant (3) to quadrant (1)
and offer cereals to bring them to (4), and
reduce competition. Entrepreneurs who
enter the market with solutions for
customers who are at lower points in the
tunnel may have to make a significantly
higher level of effort (and substantial
investment) to possibly make some impact
in the market. For instance, Iriddium failed
in the market because despite some of the
best promotional efforts, Motorola could
not make its targeted customers feel
critical about it, nor have high level of
discontentment with the existing situation.
Ford Edsel failed when the company
brought out a car with features which were
neither critical to customers nor eliminated
any discontentment.
Unlike Kellogg’s which proactively work
towards creating a change, there are
instances of some firms spotting changes
in the level of criticality of some customer
needs under the influence of either external
or internal factors. These changes on the
criticality front could also lead to a rise in
discontentment level. This movement of
customer from quadrant (3) to (1) through
the Discontentment-Criticality Tunnel
creates new opportunities, as is being
experienced by toy maker Jakks Pacific.
Jakks Pacific is one of the Fortune 100
Fastest Growing Companies since 1999
when the ranking was introduced and is
one of the Forbes 200 Best Small
Companies in the US since 1999. Its
strategy has been to grow through new
K.Ramachandran
product introductions in tune with the
dynamism on the level of criticality to
customers. The company went public for
the first time in 1996. Its net sales grew
from $12m that year to $42m in 1997 and
$85m the next year. Total revenue for 2000
was $210m, and $310m for 2002. Net
income also registered attractive growth
($1.2m in 1996, $2.8m in 1997, $6.4m in
1998, $26.6m in 2000 and $36.5m for
2003). The overall toy industry in the US
is estimated at $15 billion in sales per
annum. Jakks Pacific manufactures a new
array of toys, the most popular among
them being action figures of the World
Wrestling Federation (WWF). In 1998, it
introduced 100 new products under the
WWF category. Many of these products
were made interactive in 1999. The others
are ‘American Muscle’ category cars,
animated animal toys for babies and dolls
of adolescent age ‘Charlie’s Angles’ coming
with fashion accessories and additional
clothing. Jakks Pacific brought out about
700 products in 1999, all categories put
together.
Jakks Pacific’s toys are different from
others in two ways. One, they have
introduced a new range of toys bringing in
a novelty element which is important for
toy business. This is based on the fact that
children always want change and look for
new toys. Once the novelty disappears,
the consumer looks for a change. Here the
need will be maturing in tune with the
changing socio-cultural profile of the
society. It is in this context that the second
dimension becomes relevant.
It is useful to understand the socio-
cultural factors contributing to the rise in
demand for these characters. Pro-
wrestling is becoming big business in the
US with the two privately owned
organizations (World Wrestling Foundation
and World Championship Wrestling)
accounting for annual sales revenues of
US$1 billion generated from sales of action
figures, T-shirts and matches broadcast.
Obviously, there are direct and indirect
commercial dimensions to the promotion
of this violent ‘game’. Each of these
businesses supports the promotion of
the concept and thus the other businesses
indirectly. There are also training
30 Nanyang Business Review
Vol. 2 No. 2 July – December 2003
schools across the US to train people to
be ‘professionals’.
The rapid growth in viewership for
programs organized by the ‘pro-wrestling’
organizations could be interpreted as a
reflection of the changing social values.
In any case, that has led to a change in the
preferences of children for toys. They
would like to possess models of their icons
from this field and create their own boxing
‘rings’ at home.
Jakks Pacific exploited a maturing
latent need for such products without
changing any of the processes involved
in toy purchase, except for the
introduction of an online store. They
offered solutions to customers who had
moved up from a low discontentment -
medium criticality position ]in quadrant
(3)] to a high discontentment – high
criticality position [in quadrant (1)]. It is
interesting to note that when they noticed
signs of a fading interest in the wrestling
characters, the company quickly jumped
on to selling Harry Potter craft sets in
2001. Building on the ‘Harry Potter’ brand,
they have got into licensing agreement
for introducing Harry Potter characters.
In this case, they are exploiting an
opportunity in the high discontentment
– high criticality zone of the matrix. The
company is launching a line of girls
fashion accessories based on the hit TV
show ‘American Idol’ and a toy line for
Nickelodeon’s’ The Fairly Old Parents,
both in 2003.
Quadrant (4) reflects customers who are
highly contended with the existing options
available to meet their critical needs. It is
very difficult to penetrate into such markets
with new offerings. The challenge gets
compounded because customers do not
work out the best solution always; they
tolerate variations in performance within
a range, which is called the ‘tolerance
zone’(Kasper, Helsdingen and Vries jr,
1999). For most critical items, the
tolerance zone is narrower compared to
less critical items. This argument applies
to other quadrants as well.
We should remember that a dissatisfied
customer may not always offer an
entrepreneurial opportunity easily.
Customers would not like to switch brands
K.Ramachandran
because of the perceived risks involved if
such a change is insignificant. Customers
do not switch brands not because they are
loyal to any brand, but because of the
uncertainties associated with untested
experience of using an alternative.
Customers do not want too many hassles
and there is a zone of ‘satisficing’ (Simon,
1959) or ‘tolerance’ (Zaithaml, Berry and
Parasuraman, 1993) within which they
would prefer to stay. Therefore, minor
deficiencies in the mix of offering are not
likely to result in a shift in brand
for a customer. This should not be
misunderstood as pure loyalty to any
brand. Also, the level of discontentment
for a given brand will be lower, if
substitutes exist.
The strategic implications to existing
firms are: one, they have to constantly
identify changes in needs and modify the
features accordingly, as is done by many
airlines. The other option is to create new
needs by terminating an existing product
before it completes its life cycle. For
instance, Intel’s Pentium chips are upgraded
before their demand matures. Gillette
upgraded its Sensor XL the same way with
the offer of Mach 3 razor.
Introduction of colour TV to substitute
black and white TV and email replacing fax
and surface mail are examples of creation
of discontentment (moving the customers
to quadrant 1) and reaping benefits.
For new entrants into the market, the
challenge is to develop something that can
create discontentment with the existing.
That requires identification of maturing
latent needs. Apple Computers became a
run away success with its PCs because of
its ability to identify a maturing latent need
to have more comfortable and convenient
computing. Disruptive technologies are
found to achieve this by challenging
existing market leaders.
Where to enter:
This framework can be used to
predict potential attractiveness of an
opportunity, whether for start up or
existing firms. An understanding of
the dynamism in criticality and
discontentment will enable managers to
31 Nanyang Business Review
Vol. 2 No. 2 July – December 2003
identify entrepreneurial opportunities.
As shown in Exhibit 1, maximum
market attractiveness lies where both
discontentment and criticality are high
and currently existing, which we call
Today’s Star. At the other end, when
both are emerging, the opportunity is
indeed promising, but not immediately
(Distant Star). When only one
of the dimensions (either high
discontentment or high criticality) is
existing now and the other is only
slowly emerging, it can be an
Opportunity for Tomorrow. Making a
success out of products falling into
quadrant (4) is not very easy. It calls
for challenges in innovation. Managers
and entrepreneurs have to constantly
watch the movement of a product idea
on these dimensions to exploit the
opportunity at the appropriate time.
This analysis can enable managers to
determine when changes are required
in product features.
Firms will find easy entry and quickest
success for products which provide
solutions to highly critical customer
p ro b l e m s b u t f o r w h i c h e x i s t i n g
s o l u t i o n s a re h i g h l y i n a d e q u a t e
(quadrant (1)). Maximum returns can be
made with minimum effort in this case.
As soon as the product concept is sold,
customers would lap up such products.
Buyers will have limited bargaining
power, and several firms can manage
operations with negative working
capital. Sales would peak once the
possible process hurdles related to
discontentment such as information
availability and distribution are removed.
This situation is similar to a waterfall
f ro m a v e r y h i g h p o i n t w i t h o u t
obstructions on the way down, creating
maximum impact. Such a strategy will
also ensure quicker cash flows and
market feedback. An analysis of the
v a r i a b l e s a ff e c t i n g c r i t i c a l i t y a n d
discontentment and where different
segments of customers are located
on Exhibit 1 would be very useful to
formulate product market strategy
in detail.
K.Ramachandran
Where are the opportunities?
Entrepreneurial opportunities exist
wherever the level of criticality and extent
of discontentment peak. These cover not
only products but also services required
to consume products, traditionally called
value chain. According to Michael Porter
(1985), value is created in a product
through a series of activities in the
organization involving all the resources in
different degrees. Extending the logic, the
sources of dissatisfaction are also some
or all of these value links. In other words,
the role of this chain is to eliminate
customer dissatisfaction, and is, therefore,
called Customer Dissatisfaction
Elimination (CDE) Chain. An analysis of this
chain enables us to identify a number of
entrepreneurial opportunities in both
manufacturing and service sectors. These
can be any link on the CDE Chain. A close
look at any link would show that it
represents a Criticality-Discontentment
Matrix. For instance, outsourcing of house
keeping services. In terms of criticality,
it is not very high, but it can be a major
source of discontentment for internal
customers and hence the decision to
entrust it with specialists in that area. It
becomes a commercially viable
opportunity for a new firm when many
firms realize this logic in outsourcing such
services. Courier services and IT enabled
services are examples of such
opportunities. With the rise in
intensification of attitude, skill and
knowledge for success in eliminating
discontentment in each link, their role,
significance and structure have undergone
changes rapidly. Modifications in the
structure of the CDE Chain is a reflection
of the methods used to eliminate
dissatisfaction on the Chain. New links
may be added, which can eliminate
discontentment easily and profitably.
The key steps involved in the use of
the matrix to determine attractiveness
of an opportunity are listed in boxes
3, 4 and 5.
32 Nanyang Business Review
Vol. 2 No. 2 July – December 2003
 Box 3:

Applications of the Tools

Some of the useful applications of the tools discussed here are the following:

• Level of attractiveness of an opportunity can be predicted fairly accurately.

• Identify where new market opportunities exist.
• The customer Dissatisfaction Elimination chain argument opens up possibilities of identifying
opportunities anywhere on the CDE chain.
• Possibilities of modifying or creating new attractive links on the CDE chain can be explored
more accurately.
• Product positioning, brand building, advertisement and promotion strategies can be formulated
by choosing areas of criticality – discontentment.
• Determine when to make changes in product features.
Since the stage in the life of an industry will influence the extent of attractiveness of an
opportunity, the criticality discontentment framework can be used to formulate and evaluate
entry strategies.

Box 4:

Applications of the Tools

Customer-route and product-route can be the starting point to be iteratively linked to each other.

Customer-route:

This route is appropriate for entrepreneurs who have not invested in the development of a technology
as of now.

1. Observe customers to identify things, processes or prices with which they are dissatisfied. This
may be with special focus on certain industries or skills in which the entrepreneur is interested.
2. Construct the CDE Chain and locate the links, which are the sources of dissatisfaction.
3. Develop a Criticality-Discontentment Matrix for each such weak link and plot the source of
discontentment on it.
4. Assess the extent of attractiveness of this as an opportunity in terms of the location on the
Matrix, and the level of dynamism in criticality. The more the dynamism, the greater the challenge
in reminding customers about their dissatisfaction with the present. For instance, for ‘fun’ products,
the level of criticality is more dynamic than for a staple food, and the sources of fun may be the
products and processes.
5. Examine the extent of match between the identified opportunities and entrepreneurial resources
(existing and that can be created) and overall corporate or personal strategy. This is to determine
the entrepreneur’s capabilities to develop solutions to the problem links already identified.

Product-route:

This route is advised for those with a product or process already developed, and who are looking for an
attractive application.

1. Identify as many applications of the product / process through a brain storming session.
2. Plot each of the above on the Criticality-Discontentment Matrix for different customer segments.
This can be iteratively done to fine tune and focus on customers groups in quadrant 1.
3. Evaluate the techno-commercial implications of implementing each of the most attractive
opportunities.

K.Ramachandran 33 Nanyang Business Review

Vol. 2 No. 2 July – December 2003
 Box 5:

Measuring Criticality and Discontentment

Criticality

Observing and/or interacting with customers who are dissatisfied with the present can
determine the level of criticality of a need. Accordingly, rate the criticality on a 5-point scale. To
revalidate this rating, ask the customer the level of criticality in the immediate need set. For
instance, criticality of need for bottled mineral water my be rated as 5 on the scale. Ask the
customer, “in your overall need for a journey, how critical is this water compared to the level of
criticality for class of journey in the train, snacks on the way and so on?” This additional question
is to make the customer think more logically, rather than intuitively, and enable the entrepreneur
to determine the level of criticality more objectively.
It is important to determine the level of criticality of each of the links on the CDE chain
separately, where the entrepreneur is either creating a CDE chain afresh, or the quality of other
links on the CDE chain is important for the success of the opportunity already identified.

Discontentment

Broadly the sources of discontentment are product features, processes of buying and
consumption, and price. Customers can rate the extent of dissatisfaction on a 5-point scale through
observation and or interaction as discussed under criticality.
Recent performance of conjoint method in identifying customer preferences in a number of situations
is very promising. It is possible to validate the findings quantitatively.

An entrepreneur / manager has to A close look at the sources of

constantly identify existing and emerging
sources of discontentment and level of
its criticality, and then keep offering
solutions, all to retain customers and
create new ones. Each link in the CDE
chain plays a unique role, high or
low on criticality.
discontentment would show that a number
of factors contribute to it, besides those
identified by conventional wisdom. When
products are becoming increasingly
standardized with given core and
peripheral features, many process involved
in linking the firm and the customer

Exhibit 2: Customer Dissatisfaction Elimination Chain

K.Ramachandran 34 Nanyang Business Review

Vol. 2 No. 2 July – December 2003
becomes sources of discontentment. This
would include information collection,
buying, paying, delivery, consumption,
return of unused products if necessary,
after sales service and disposal of waste
after use. Each one of these or their sub-
activities is a possible new entrepreneurial
opportunity; the level of attractiveness of
course depends on a number of techno-
commercial dimensions.
Information Collection Process: One of
the most critical steps in the buying process
is collecting information not only about a
specific product but also about alternatives.
This remained a major challenge until the
arrival of the Internet. Firms such as ebay,
Amazon and Google eliminated most
customer dissatisfaction on this count
when they made it possible to collect
information on a variety of things quickly
and reliably.
Buying Process: Amazon.com became
a run away winner because it eliminated
customer dissatisfaction that existed in
the process of going to a bookshop at a
time when it is open and buying a book
from among titles available there, as
against scanning all possible titles in the
area of interest and deciding in a few
minutes from anywhere in the world, all
using the Internet. For most book buyers,
while the buying process is very critical,
they are not particular about seeing the
product as it is standardized in terms of
shape and looks. This is not the case with
many other products where touch and feel
are important. Boo.com failed as an
Internet garment firm for this reason. For
such items, firms have to ensure wide
distribution through a number of
channels/outlets to eliminate customer
dissatisfaction.
Payment Process: This is yet another
critical process, but has created much
customer discontentment until credit/debit
cards came on the scene. Customers had
to bear the consequences of carrying liquid
cash while going for any shopping.
Similarly, shop owners also had to bear the
consequences of cash based transactions,
including non-purchase for want of
adequate amount of liquid cash. Cards
from Visa and Master (and others)
eliminated all associated dissatisfaction.
K.Ramachandran
Delivery Process: Arrival of courier
service itself eliminated a lot of the
dissatisfaction that existed with the quality
of delivery of parcels and mails. FedEx
introduced a number of features such as
bar code label on package for route
tracking thus enabling customers to check
the location and progress in the journey of
the parcels. Other facilities such as home
delivery and Saturday 10 am delivery
further eliminated customer dissatisfaction.
DHL Courier service identified yet another
critical need that left a lot to be improved
when it offered DHL Jumbo service.
According to this, customers with a number
of small parcels could put all in a big box
and courier it safely and more economically,
as is done in cargo containers.
CDE Chain and Business
Strategy
We shall see the role and significance of
the CDE chain in the context of the strategy
of a firm and its efforts to achieve Zero
Customer Dissatisfaction (ZCD) in the
context of Domino’s. In order to achieve
the strategy described above, Domino’s
designed and developed an appropriate
CDE chain. Each link formed a source of
dissatisfaction, reflecting the different
processes that a customer is involved in
the purchase and consumption stages. One
of the important links is product feature.
The Company perfected and strengthened
all links in the CDE chain.
In the case of Domino’s, the company
perfected and strengthened all links on the
CDE Chain over the years and built
competitive advantage. Some of the
important links on Domino’s chain, and how
it strengthened them are worth examining.
Ordering Process:
Domino’s developed a computer
system and database that enabled it to
speed up order taking and delivery
processes. For instance, it could generate
immediate information on the customer
such as the previous pizza order details.
As a result, time and effort required for
both the company and the customers in
giving details of address and preferences
35 Nanyang Business Review
Vol. 2 No. 2 July – December 2003
could be avoided, thus eliminating
possible dissatisfaction on this count.
Delivery Process:
The database also provided addresses
and directions to customers’ place and even
the location of the doorbell. The system
would print all such information, which
would then be stuck on the pizza box for
delivery. Domino’s also perfected a system
for scheduling drivers for their bikes.
Domino’s was able to replicate this model
all over the US and abroad within a short
period of time. In order to ensure that
customer concerns about supply of hot
pizza were met, Domino’s offered delivery
within 30 minutes. Later, in 1993, it
discontinued this practice and replaced it
with ‘Total Satisfaction Guarantee’. It was
forced to lift the 30 minute limit faced with
traffic related problems. By this time, the
corporation had already built up its
reputation as the supplier of high quality
pizzas at home within a short period of
time. Each Domino’s shop is permitted to
accept orders only from within a two-mile
radius to ensure high quality timely service.
The introduction in 1998 of Heat Wave, a
hot bag using patented technology that
keeps pizza oven-hot to the customer’s
door further ensured that Domino’s did
not allow any kind of customer
discontentment from cropping up.
Cost and product features
(quality, taste):
Domino’s followed regionally centralized
purchasing, processing and handling of raw
materials and other ingredients through
their distribution centers called
‘commissaries’. However, negotiations for
specifications, price and delivery terms for
most pizza ingredients and other supplies
such as boxes and napkins are handled by
Domino’s central purchasing department on
a worldwide scale. For instance, Mozzarella
cheese is sourced from New Zealand
for all Domino’s outlets across the world
through a number of commissaries.
Through its network of 18 such distribution
centers, Domino’s pizza distribution
division regularly supplies more than 4,500
K.Ramachandran
pizza stores with more than 150 products,
ranging from dough to pizza boxes. This
takes care of the need to have consistency
in quality also across stores. The central
commissary system also ensured that these
sales outlets are relieved from spending
long hours making dough, grating cheese
and preparing toppings.
Exhibit 3:
Price Elasticity and Needs
The above strategy has enabled
Domino’s not only to keep the price low
for its pizzas, but also maintain high quality
product, both eliminating customer
discontentment to a great extent.
Similar levels of perfection exist in the
case of a number of other products such
as Dell Computers. Dell has perfected the
art of assembling and delivering PCs
without having to carry any inventory of
its own.
Our research showed that price elasticity
of demand is one of the most critical factors
influencing the success of a product. For
instance, customers often buy a product,
even when it is expected to meet a need,
low both on criticality and discontentment,
provided the price is very low.
Conceptually, customers buy such products
to meet momentary critical needs for fun,
when price is close to zero. To capture the
power of price in this process, we suggest
a three dimensional relationship involving
criticality, discontentment and price as
shown in Exhibit 3. As noted earlier,
Dominos offered a solution combining high
quality, tasty pizzas at low prices to meet
a critical need of customers.
36 Nanyang Business Review
Vol. 2 No. 2 July – December 2003
Existing firms offering unique value to
customers and then eliminating their
dissatisfaction will have to constantly
review changes in the needs of their
customers, and offer entrepreneurial
solutions. This builds deep corporate
entrepreneurial culture in organizations.
For instance, Disney theme park and Intel
chips have been constantly innovating their
offer to customers, and creating entry
barriers for others in the process. There
are signs that indicate that their capabilities
to meet customers’ changing needs are not
infallible.
Categorizing customer groups broadly into
four segments and further plotting them
within them as per Exhibit 1 enables us to
spot the market segments with greater
opportunities and position the products
there. For instance, what is non-critical for
one segment may be critical for another.
Similarly, levels of discontentment are also
highly dynamic.
Conclusion
Customer dissatisfaction is a source of
opportunity. Focusing on existing /
emerging customer needs in terms of
their level of criticality and extent of
prevailing / emerging discontentment is a
very useful way to identify entrepreneurial
opportunities. Let us realise most human
beings are basically selfish, lazy, prefer to
avoid work, like to eat tasty things and have
all possible comforts. They would welcome
any means to achieve the same.
Characteristics of the opportunities (size,
stability….) of course, vary accordingly, and
can be for either internal or external
customers. Exploitation of such
opportunities and thus elimination of
dissatisfaction on every link of the
Customer Dissatisfaction Elimination Chain
will enable organizations to be
entrepreneurial always. They will achieve
Zero Customer Dissatisfaction for them,
and be immortal.
In short, this framework is highly useful in
determining the attractiveness of an
investment opportunity, and subsequent
formulation of business strategies.
K.Ramachandran
Combining the features of the CDE chain
and the Criticality-Discontentment Matrix
provides for a powerful tool for
managers to evaluate the appropriateness
of their existing strategies.
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